“I’m in the process of completing my first cash flow property and I am getting ready to start thinking about tenants. How do you determine who will make a good tenant?” -Jim of Seattle, WA
We highly recommend that new investors utilize a property management company. A well-run property management company will underwrite and screen your tenants as well as make sure the tenant is creditworthy, has a good rental history, and has documented income. I’ve seen tenants who have done some pretty crazy things to hide their history. What we tend to find is that high-risk tenants seek out individual property owners rather than larger property management companies. I look at being a landlord as a business all on its own. There are many hazards associated with being a landlord and those hazards can make real estate investing an absolute nightmare. Until you completely understand the potential risks and how to mitigate these issues, utilizing a property management company can be extremely beneficial.
